Critical Mass, Law.com's briefing on mass torts and class actions, profiles CEI's Center for Class Action Fairness on the cy pres case the Supreme Court may take up:
“Cy pres.” It’s French for a controversial doctrine that allows lawyers to designate third parties to receive leftover settlement funds in the event that not enough class members make claims.
Supporters say the so-called cy pres doctrine is a permissible–and worthy– use of leftover settlement funds, particularly when class members are too numerous or hard to find. But critics say the practice encourages lawyers to fund pet projects or — in a petition filed last month before the U.S. Supreme Court – their alma maters.
Here’s the case: Class action critic Ted Frank objected to a $8.5 million settlement in a class action alleging Google illegally shared the search queries of its users. The deal gave $5 million to six nonprofits, including Stanford and Harvard. The 9th Circuit upheld the deal. Frank’s petition, written by Andrew Grossman of Baker & Hostetler, says the decision splits with other circuits.
This month, attorneys general from 16 states filed an amicus brief (you can read it here) urging the Supreme Court to review the case. “If left unchecked, the conflicting approaches taken by the circuits toward this issue will likely result in significant harm to consumers nationwide,” they wrote.
Other briefs were filed by the Center for Individual Rights, the Center for Constitutional Jurisprudence and the Cato Institute, raising constitutional issues such as the free speech rights of class members who may disagree with funding the cy recipients.
Here’s why it matters: Back in 2013, Chief Justice John Roberts wrote in a privacy case against Facebook called Marek v. Lane that the high court was looking for a case to determine “when, if ever, such relief should be considered.” Robert’s comments were cited in the Google briefs.
Eimer Stahl partner Susan Razzano told me:
“The Supreme Court more or less asked for a case that will allow it to analyze how cy pres is used in class action cases,” she said. “And I do think that this Google case might be that opportunity that Chief Justice Roberts was looking for.”
Read the full briefing on Law.com here.